Wilton CT (November 4, 2019)
Cadent Consulting Group’s 2020 Marketing Spending Industry Study has been released, including the introduction of a new metric to track the focus of spending. CPG manufacturers spend over 21% of sales in marketing, or approximately $225 billion annually. These dollars can drive price, build equity, or both; the P/E Quotient (P/EQ) is a means to track the overall focus of these expenditures.
- “While logical incrementalism is an apt way to describe year-by-year changes in Marketing Spending,” stated Don Stuart, Managing Director at Cadent Consulting Group, “over time we’ve witnessed dramatic shifts. The P/E Quotient swung from 0.66 in 2014 to 1.06 in 2020, revealing a major shift from equity building to price.”
- Is Digital the new traditional? Digital is now the second largest spending area and continues to grow. Effectiveness of Digital spending as rated by retailers improved, however, shoppers rate it the lowest on awareness and influence. Shopper Marketing, Advertising and Consumer Promotion spending have all sharply declined
- Trade Promotion is the largest spending component and has had a significant impact on the P/E Quotient. Price focused Trade Promotion represents 62% of total trade, up 15 points from 2017. Display oriented support dramatically declined.
“Having a price focus is not in itself wrong, however it is important to take a proactive approach to getting there. Our new metric, the P/E Quotient, allows organizations to track their historical practices as a company, by segment, and by brand and to make a proactive decision as to how to spend in the future.” said Karen Strauss, Principal at Cadent. “Knowing what’s right for your shoppers and your brands, and leveraging your portfolio mix correctly across retailers is a winning formula.”
About Cadent Consulting Group
Cadent Consulting Group is a Marketing & Sales Management Consulting firm. Cadent has published studies on the Path to Purchase, Strategic Pricing and “The Branding of Private Label”. The 2020 Marketing Spending Study, “What’s Your P/E?” represents the third Marketing Spending release. Please contact us with questions or for further information.
Don Stuart, Managing Partner Karen Strauss, Principal
Cadent Consulting Group Cadent Consulting Group
Wilton, CT 06897 Wilton, CT 06897
(203) 529-3712 (203) 762-6233